USDA Loan Income and Credit Eligibility

The USDA has two sides to their eligibility requirements − property eligibility and the borrowers financial and credit eligibility. This section discusses financial eligibility, while the USDA’s property guidelines can be found here.

As with most any mortgage loan, you must demonstrate your ability and willingness to repay the loan in monthly installments. Your credit history will be analyzed to determine whether you have a reasonable ability to meet repayment obligations as they become due. Additionally, you must show that you have steady and sufficient income that is enough to meet mortgage payments, as well as reserves each month.

Evaluating Income for USDA Loans

The USDA home loan guarantee program is designed to help low to moderate income families. To ensure this, the USDA enacts income restrictions depending on the area you wish to purchase a home.

To determine your income eligibility, your loan underwriter will look at your gross income, income from any co-applicants, as well as any other adults who plan to live in the household. If your income exceeds the maximum mark, you may still make certain adjustments to your gross income that will help you qualify.

Are you steadily employed with the same employer for many years? Having a steady job and income helps with the underwriting process. But what if you have worked many jobs over the last few years? Or you are self-employed?

In order to give a loan underwriter a clear picture of your income, you will need to submit copies of at least two years of IRS tax filings. If you are self-employed, three years of tax returns may be necessary to determine a good average income. If you currently work for an employer, you should provide copies of the last two months of pay stubs.

Contact USDA today to see if you qualify!

Employment Eligibility

The USDA does not require a minimum employment history from a certain position to obtain a USDA Loan; however, there is the requirement that a borrower should have a history of receiving stable income for two years. This means you should be able to show a lender two years of steady income through employment or by child support or contract income.

Acceptable forms of income include a base salary wage, overtime, commission, tips, contract work, bonuses, housing allowances and compensation from other adults living in the residence. If you are self-employed, you must be able to furnish two years of tax forms, showing stable employment in the same line of work.

Gaps in employment history exceeding 30 days must be addressed by an explanation letter, unless the income history is seasonal in nature. If you have less than two years of steady employment, you may still be eligible if you are new to the workforce, have recently returned to the workforce after an extended absence or have a strong likelihood of continuing in your current position.

Credit Eligibility for a USDA Loan

When you are ready to make a home purchase using a USDA home loan guarantee program, you must find an approved lender who is familiar with the USDA home loan underwriting guidelines. When you set up an application, your credit history will be ordered by the lender.

Your credit history shows your past debt obligations to other creditors and whether you paid on time or late, or if you managed your credit within limits or extended your limitations. Any derogatory late payments, such as 30 days or more, will show on this credit history. Also, any bankruptcy, repossession, or foreclosure will also be revealed on the credit report.

If you know you have made all past credit payments on time and have a good credit history, you are in good standing, and your home loan underwriter will enjoy looking at a clean report. But even if you have some "spotty" or derogatory credit issues listed above, you still may be eligible for a loan. The good news with a USDA mortgage guarantee home loan is that there is no minimum credit score.

A mortgage loan underwriter wants to know that you are willing to repay the loan. If you credit history shows late payments or even previous bankruptcy, you can still repair your credit report with a good deal of effort.

Late payments must usually be at least a year in the past, and your current history must show that you have met your credit obligations on time and diligently for at least 12 months. If you have filed for previous bankruptcy, the declaration usually must be at least two years old. Since the bankruptcy, you must show that you have been diligent with credit and debt payments.

Your dream of owning a home can become a reality. Your diligent work at correcting credit issues and stead income verification will be a big help in obtaining a rural home loan guaranteed by the USDA.

Get Started Now!

Or call 877-701-USDA to speak to a USDA Loan Specialist.

Select Loan Type(*)
Select Loan Type
What State?(*)
Select Your State

Loan Amount(*)
Select Loan Amount

Your Home's Current Value(*)
Estimate Current Home Value

How Much do you Currently Owe?(*)
Select an Amount

When Do You Plan to Purchase?(*)
Select Purchase Timeframe

Have you Found a Home?(*)
Select One

Have you had a bankruptcy, foreclosure or short sale in the last 3 years?(*)
Please provide an answer

Estimate Your Credit(*)
Provide a Credit Estimate

NOTICE: You have selected that your credit is poor or needs repair. With poor credit homebuyers may have a more difficult time of obtaining favorable terms and conditions, or receiving a loan at all.

We suggest you take the first step and work with a credit repair specialist and remove any unnecessary collections, delinquencies or duplicate accounts from your credit report, so you could possibly receive better terms and conditions.

Learn About Credit Help or click next to continue filling out our form.

Do you Currently have a USDA Loan?(*)
Select One

What is your Current Interest Rate?(*)
Select Current Interest Rate

First and Last Name(*)
Enter Your First Name
Please type your Last Name
Street Address(*)
Invalid Input

Current City and Zip Code(*)
Invalid Input
Invalid Input
Home Phone(*)
Enter a valid phone number with area code.

Alt Phone (Recommended)
Enter a valid phone number with area code.

Invalid email address.

You must agree to this before proceeding. By checking this box, I understand I will receive a call from a lender, even if I am on a Do Not Call list.(*)

By clicking “Finish!” I agree by electronic signature to: (1) be contacted by Lexington Law Firm about credit repair or credit repair marketing by a live agent, artificial or prerecorded voice, and SMS text at my residential or cellular number, dialed manually or by autodialer, and by email (consent to be contacted is not a condition to purchase services); and (2) the Privacy Policy and Terms of Use.